Huntsville Times covers the FairTax
Posted by BrianWith half of the eight AL-05 Congressional candidates supporting the FairTax, Patricia McCarter of The Huntsville Times decided to write an article about it.
It’s what propelled two of the eight congressional candidates to run.
Another two have agreed that if elected, they’ll sign up to be co-sponsors of it. What is it about the Fair Tax proposal - which would completely undo the way Americans pay federal taxes - that warrants the support of half of the 5th District congressional candidates?
“It untaxes the poor, and it’s just so bloody simple,” said Chuck Bailey, a retired Boeing engineer who heads North Alabama’s Fair Tax organization.
“Just imagine never filing another tax return, bringing home your entire paycheck and abolishing the Internal Revenue Service. Sounds pretty good, doesn’t it?”
Side note, Chuck is not British. Not sure where the “bloody” came from!
Overall McCarter did a very fine job covering the topic and I encourage you to read the article. You’ll even find a quote from yours truly if you decide to invest your time doing so.
As any diligent journalist should, McCarter sought out an opposing view for her article. She found Dick Hiatt, executive director of the Food Bank of North Alabama. I’m sure Mr. Hiatt knows the poor and their issues very well, but he didn’t seem to know much about the FairTax specifically or federal taxation in general.
“Prebates sound like a smoke screen to me,” he said. “I just don’t see how that can work. If it was just going to be charged on luxury items, go for it. But a sales tax puts a lot of stress on a government. What will it do when the economy isn’t ripping and roaring?
“It’s regressive and an unfair way to spread tax. Property tax is much more stable. Knowing what I know about how poor people live, I’d have to say that the Fair Tax isn’t fair at all.”
Remember - we’re talking about federal taxes. The federal government has no authority to impose property taxes on Americans so his tax stability point is irrelevant. States and municipalities can, but not the federal government. For Mr. Hiatt to make such a statement shows that he is not only under-informed about the FairTax, but that he doesn’t seem to understand how federal taxation works. He’s clearly an advocate for the poor, though. Any time you ask such an individual a question about taxes it’s like pulling the string in their back and getting the canned property tax response. But, to tend to Mr. Hiatt’s point about tax base stability there is a study that compares the stability of the income tax base, which the federal government currently uses, to the tax base for a consumption tax, which the FairTax would use. That study indicates that a consumption tax is more stable than an income tax - and since we’re talking about federal taxes that should placate Mr. Hiatt.
I’m actually kind of surprised that Mr. Hiatt would be so opposed to the FairTax, unless his position is based on a lack of topical knowledge. The FairTax would completely untax the individuals he represents. They may not realize it, but the poor bear a substantial federal tax burden due to taxes that are embedded into the cost of products they purchase. Under the FairTax a poverty level family would pay absolutely no taxes - hidden or not - to the federal government. Sounds like a good deal for the poor to me.
As I mentioned earlier, McCarter did include a quote from me reflecting my mixed feelings about having half the candidates support the FairTax. It’s great that half of them realize that this is a bill that many voters in North Alabama support and it helps to have them out on the stump extolling its virtues. But, with four candidates to choose from supporters may dilute their votes, thus harming the end goal of electing a representative who supports the plan.
Candidates who support the FairTax and have pledged to sign on as a cosponsor:
- George Barry
- Mark Huff
- Angelo Mancuso
- Ray McKee
Candidates who DO NOT support the FairTax:
- Parker Griffith
- Cheryl Baswell Guthrie - said it’s “a great concept, but let’s be real.”
- David Maker
- Wayne Parker - said it could “jeopardize the economy”
You can see each of the candidates explain their position on the FairTax in the WHNT candidate forum. [Click on the link on the left titled "The Debate: Interactive Panelists Ask Questions from WHNT.com & Al.com."]
Congratulations to Chuck Bailey on a job well done explaining the FairTax and many thanks to Patricia McCarter for a well written article.
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June 1st, 2008 at 12:43 pm
The flat tax still appears to me a way to shift the tax burden further towards people who can less afford it. Yes, it might help solve two of the main problem with the current tax system, it’s complexity and inefficiency, but at what cost? To quote Bob Dole, a flat tax would “shift the tax burden from the super rich to the middle class.” Plainly spoken, it is a raw deal for the middle class. The flat tax would leave in place all the taxes middle class people pay (sales, tax, property tax, and excise taxes), but still makes them pay an income tax. According to the Treasury Dept. estimates that the flat tax, like the one proposed by Dick Armey, would cause a tax increase for people making less than $200,000 a year and a huge tax cut for people making more than $200,000 per year.
June 1st, 2008 at 12:50 pm
I’m not arguing for the flat tax that Dick Armey proposed; I’m supporting the FairTax - there is a difference.
June 1st, 2008 at 9:01 pm
You failed to explain what you would do about killing the middle class with taxes, but first let’s look at your comment. The plan that was advocated popularly my Dick Armey would have only been a %20 tax, so the numbers advocated by your kindred (%23) would be worse than what Armey proposed. Also to be addressed by the tax system you purport is the potential shortfall in revenue. According to the bipartisan Advisory Panel on Tax Reform “a [federal] sales tax would have to be set at 34 percent of retail sales prices to bring in the same revenue as the taxes it would replace.” Where is the extra money going to come from? Let’s not kid ourselves as to think our legislators are going to stop spending our money unwisely at the expense of our national security. A logistical problem also arises, how would we collect the money? Are we going to have “revenuers” running around again, trying to make sure businesses don’t cheat on their national sales taxes? If so, how much will this cost? Forgive me, but regardless of my own moral outrage at taxing the hell out of people who can barely make it as it is, I truly don’t understand how this can work.
June 1st, 2008 at 9:20 pm
The FairTax doesn’t kill - or harm in any way - the middle class. I’m in the middle class and I’ve done the math. I wouldn’t support it if it harmed me personally.
Here is the “official” rebuttal to the Mack/Breaux tax panel. For starters they assumed a narrower tax base than what the FairTax (as written) would have.
Yes, there will be some type of agency to ensure compliance. You can call them “revenuers” if you like. One main difference - especially regarding cost, since you brought it up - is that the FairTax would have substantially fewer tax collection points than the income tax. The IRS must monitor every business and every individual to ensure compliance. The FairTax agency would only have to monitor the businesses that collect the tax. If you like I can point you towards numerous articles about the problems the IRS is already facing trying to ensure compliance. The code is too complex, there are too many filers, and some businesses are just too large. Their auditing of large companies has been described as a historic collapse, for example.
I could be confused, but I thought we’ve discussed these points before. All of your concerns (”how would we collect the money?”) have been addressed before (if not here, then in many places). I would encourage you to read the FairTax Book by Boortz/Linder with an open mind. There is also a follow up book that specifically deals with criticisms of the plan.
June 2nd, 2008 at 6:31 am
[...] Go to the author’s original blog: Huntsville Times covers the FairTax [...]
June 2nd, 2008 at 10:20 am
I’d much rather pay tax on what I spend (and have a choice) than on what I earn. The Fair Tax eliminates headache and hassle and cost for everyone who pays income tax. Its a double plus for consumers, since it eliminates costs for businesses. Those businesses will be able to provide their goods and services at a lower price, or better quality for the same price. I can see businesses tripping over each other trying to get into (or back into) the US, and in trying to gain market share through lower prices and/or better quality.
Fair Tax untaxes the poor, and, at worst is a wash for some (but even they come out better because they don’t have to worry about the federal tax code).
Learn more, and join the OOTF national movement of grassroots Citizens demanding the Fair Tax.
June 2nd, 2008 at 1:26 pm
Sounds like an UNfair tax to me. It’s just another gimmick to enable the rich to get richer and the rest to get the shaft.
June 2nd, 2008 at 1:28 pm
Have you carefully studied it redeye or are you just being reflexive?
June 2nd, 2008 at 1:37 pm
I’ve “carefully studied Brain” and it sounds like a risky tax scheme to me.
BTW, how do you “untax” someone?
I don’t mind paying my fair share of taxes, never have, never will. Our cities, country or states could not operate without tax revenue.
June 2nd, 2008 at 1:38 pm
Should have read: I’ve carefully studied IT Brain, and it sounds like a risky tax scheme to me.
June 2nd, 2008 at 1:38 pm
Based on your question it is obvious you haven’t carefully studied it.
June 2nd, 2008 at 2:19 pm
Is “untax” a word? Are you trying to say it removes the tax from the poor?
June 2nd, 2008 at 2:27 pm
Bingo
June 2nd, 2008 at 2:48 pm
How does it remove the tax from the poor Brian?
June 2nd, 2008 at 3:54 pm
Under the FairTax every single person/family gets a monthly rebate in advance called a prebate. The prebate is equal to the amount of federal sales taxes that size family would spend if they were at the poverty level. Everyone gets the same amount, based on family size. So, that family doesn’t even start paying taxes until they spend beyond the poverty level.
Even under the income tax poor families who have no income tax liability still pay taxes (payroll taxes, embedded taxes in the price of goods, etc.). The FairTax eliminates all of those hidden taxes and replaces it with a transparent tax.
Why not just make grocery items exempt? For starters it slams shut the door on lobbyists. Just imagine all the K St. crowd demanding that their client’s product be exempt. Also, you have to keep in mind that rich and poor don’t consume the same quantity and quality of groceries. As I alluded to here, why should rich people not pay tax on caviar just so poor people don’t have to pay tax on bread. With the prebate system the poor person effectively pays no tax on his bread, while the rich person ends up paying taxes on his caviar.
June 2nd, 2008 at 6:11 pm
Huh? You going are to have to make it simple for me Brian, I am a product of the Alabama public school system.
On one hand you say the “poor” will have no income tax liability but they will pay payroll taxes, embedded (?) taxes in the price of goods etc.
And just what exactly is your definition of “poor”?
The bread and the caviar analogy doesn’t work for me because anyone that can afford to buy caviar can afford to pay taxes.
The “prebate” doesn’t work for me either. Based on what you describe taxes well be assessed according to family size. How is that fair?
Make it plain.
June 2nd, 2008 at 6:31 pm
I’ll type slowly for your benefit.
The FairTax eliminates income taxes, payroll taxes, and embedded taxes (among others). An example of embedded taxes are corporate taxes. That represents a cost of doing business that is merely included in the price of the product we all pay right now.
Embedded taxes are also crushing domestic manufacturers. Products we sell overseas have taxes built into the price. Many foreign countries refund taxes their corporations pay on items that are exported. This puts American made products at a distinct disadvantage in the international market. The FairTax would tax imports and domestic products equally, ending a built in advantage foreign manufacturers have,
I’ll try to clarify the caviar analogy. If we simply exempted groceries from sales taxes then rich people could dine lavishly and throw wasteful parties - and pay no sales tax on any of the “groceries” they purchase. The prebate method ensures that they pay taxes on all groceries (and other necessities) beyond what constitutes a necessity.
Taxes are not assessed based on family size. Each individual is entitled to a prebate. The prebate amount is indexed to family size so that everyone doesn’t have to separately claim it.
I’ll try to say this nicely, but you obviously haven’t studied the FairTax very closely. It appears more like you are summarily dismissing it (or anything I say about it) because we typically have differing political beliefs. With that attitude we’ll never accomplish anything in this country. I implore you to take the time to learn the basics about Fairtax. I’ll be more than happy to answer specific questions.
June 2nd, 2008 at 8:42 pm
Brian,
Just give it up. Redeye is a hopeless case.
June 2nd, 2008 at 9:06 pm
Hope springs eternal…
Plus I’m stubborn!
June 2nd, 2008 at 10:13 pm
I’m just as stubborn but you obviously have more patience.
June 3rd, 2008 at 3:24 pm
Brian,
After reading your explanation of the Fair Tax I am convinced more than ever it is a risky tax scheme designed to make the rich richer while the rest get the shaft.
I agree with Bill, you should just give it up, beacuse I’m never going to be in favor of the UnFair Tax.
I would like to thank you for a “civil” debate. Tolerant people can agree to disagree without being disagreeable.
June 10th, 2008 at 1:12 am
redeye,
Before you write off the ‘UnFair Tax’ you might consider reading the FAQ (link to PDF below). It should address most, if not all, of your concerns.
In my view the biggest problem with the FairTax is it’s easy for opponents to demagogue. Given full information the FairTax has shown to have wide support.
http://www.fairtax.org/PDF/FairTaxFAQ.pdf